Weekly "Focus" and Got it Wrong

The big event of the week was the announcement by the US central bank regarding interest rates. There was an active debate ahead of the decision as to whether the reduction was going to be 0.25% or 0.50%. I was firmly in the camp of thinking a 0.25% cut was sufficient, but I got it wrong as they went with a 0.50% cut. On top of this first move lower, it now looks like short-term interest rates in the US will be lower by a further by 0.50% by the end of the year, matching what is expected from the Bank of Canada. Lower interest rates are good news for the economy and provide a tailwind for the stock market. Brian Belski is BMO’s Chief Investment Strategist, and he came into 2024 with a positive view on the stock market. He has now boosted his year-end target for the S&P 500 to 6,100 (sitting around 5,700 today) and this gives him the highest target among Wall Street strategists. On January 1^st we will know how accurate his target was.

 

This week’s "Focus" from our economics team is attached.

 

Have a great weekend,

 

Brad

Senior Portfolio Manager and Senior Investment Advisor